New overtime reality starts U.S. enterprises strategizing

Cynthia Figueroa is trying to figure out how to handle the new U.S. Department of Labor overtime regulations announced Wednesday that will take effect Dec. 1.

Figueroa runs Congreso de Latinos Unidos, a North Philadelphia social-service agency.

Under the new rules, enterprises will have to pay overtime to full-time workers who earn less than $47,476 - regardless of their responsibilities, regardless of whether they served as managers or as professionals, regardless of whether they were paid salaries, not hourly wages.

"We have child-welfare workers who work with families," Figueroa said. "Their work doesn't happen neatly in a particular day."

The social workers earn in the $30,000-to-$45,000 range, she said, and it's not unusual for them to attend court hearings in the morning and respond to emergencies at clients' homes at night.

"We have contracts with the city," she said. "They need to respond."

So now, Figueroa, like thousands of employers, is thinking about time sheets, electronic records, and making sure everyone is paid, all the while staying within budget.

"I think it is positive for citizens" to earn more wages, she said. "As a nonprofit leader, it's a little stressful to figure it out."

The Labor Department estimates that 4.2 million workers will either gain new overtime protections or get raises to the new salary threshold.

The changes come at a time when Americans are working longer hours, the lingering aftereffect of the recession, when companies laid off staff and pushed remaining employees to do more.

Under the law, overtime is governed by the U.S. Fair Labor Standards Act, which divides workers into two categories: those who are exempt from the act and don't receive overtime, and those who qualify.

The law sets up two criteria: salary and duties. In general, people with managerial duties and a lot of discretion on the job don't qualify for overtime.

But no matter what they do, under current law, if they earn less than $23,660 a year, they automatically get overtime. Now, that base has been increased to $47,476.

The law, as is, is a tangled thicket and a ripe field for litigation, as lawyers for workers and managers parse the exact definitions of what constitutes discretion and managerial functions.

The new base rate makes it simple for workers who earn less than $47,476. Below that amount, it is assumed that managerial duties and discretion are limited and overtime is automatic.

Above that, it's still a question of the nature of the job.

Groups representing workers laud the changes, saying they will give workers more money and prevent companies from exploiting the ambitions of their employees.

Organizations that represent employers say it will cost jobs, result in more part-time positions, and stifle the ability of ambitious workers to move themselves up the ladder by hard work and long hours. That kind of statement came from organizations representing retailers, bankers, and warehouse operators.

"I think it might hit companies who are trying to bring in college grads and want them to play a part in the growth of the company, and now you have to put them on the clock. You want them to feel part of the culture," said Kevin Robins, chief executive of the MidAtlantic Employers' Association, a group of 550 small and midsize businesses in the region.

"The larger companies are on it," said David Woolf, an employment lawyer at Drinker Biddle & Reath L.L.P. in Philadelphia. "They are preparing for it. It's the smaller companies that don't always deal well with these issues. Those are the companies who are going to scramble to get this done."

Some companies will respond by bumping up the salaries of people who earn close to $47,476, so they don't have to pay overtime.

"From the employee perspective, it's fabulous, because workers will now either get more money for the time that they work or be able to spend more time with their families," said Justin Swartz, a New York partner with Outten & Golden, a firm that specializes in employee class-action cases.

Retail is a prime example of an industry that took advantage of the existing regulations, by underpaying managers and making them take up the slack when stores were short-staffed, said Peter Winebrake, a Dresher lawyer who handles overtime cases on behalf of employees.

Stores "want to have a couple of these salaried people, and that's where they dump all the hours" they can't fill out of their regular budgets, he said.

jvonbergen@phillynews.com

215-854-2769@JaneVonBergen

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